By Natalia Chumakova and Olga Yagova
MOSCOW (Reuters) – Russia’s Rosneft <ROSN.MM>, one of the world’s top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters.
The move, which could come as soon as this year, is likely to be seen as an attempt to offset any potential negative impact of U.S. sanctions on Russia.
Rosneft, which accounts for over 40% of oil output in Russia, produced 45.8 million tonnes of oil products at home in the first six months of this year – from diesel and gasoline to fuel oil and petrochemicals.
Around half was exported to west and south-east Europe and to Asia, according to the company’s own data.
The bulk of oil products for export are sold at tenders: Rosneft holds annual tenders as well as a number of spot or short-term tenders, with BP <BP.L>, Glencore <GLEN.L>, Trafigura, Vitol and Cetracore among top buyers.
Last year, trading sources told Reuters that Russian energy majors were asking Western oil buyers to prepare to make payments in euros instead of dollars.
Rosneft last week asked buyers to use the euro as the default currency for the first time in a spot tender to sell naphtha, an official company document showed.
Rosneft was included in a list of some U.S. sanctions imposed on Russian companies in 2014, although those sanctions do not limit U.S. dollar usage in Rosneft tenders.
Traders said they believed Rosneft’s latest move was intended to protect the Russian company in case new and unpredictable sanctions are imposed on it by the United States.
Rosneft contacted buyers about switching from dollars to euros in early August.
“All new tenders for export oil products supplies will have the euro as the payment currency,” one of the five sources said, confirming what the other sources said.
Another trader said that Rosneft had last year been actively talking to buyers about including a currency clause in its contracts.
“In general, everything was agreed (last year), now we will try this in practice,” said the second source, who buys oil products from Rosneft.
According to Rosneft contracts seen by Reuters, the oil company is proposing to use a euro/dollar currency swap based on Bloomberg data.
Global oil products prices are set dollars, in line with the global oil trade.
Rosneft also has bilateral contracts with some buyers but Reuters was unable to determinate whether the company has notified counterparts to those contracts of the switch to euros.
Cetracore Energy said they had not received notice from Rosneft. Glencore, BP and Trafigura declined to comment. Rosneft and Vitol did not immediately reply to a request for comment.
Previously Rosneft only used U.S. dollars as the default currency for its oil and products sales, while the euro was considered an alternative currency in case payment in dollars was not possible.
(Reporting by Natalia Chumakova and Olga Yagova; Additional reporting by Julia Payne in LONDON; Writing by Katya Golubkova; Editing by Kirsten Donovan)